PACRA Maintains Entity Ratings of Ultra Pack (Pvt.) Limited

Ultra Pack (Pvt.) Limited (UPPL) specializes in industrial packaging solutions, primarily catering to the cement industry. A significant portion of its sales is directed toward its affiliated entity, Kohat Cement Company Limited, which holds PACRA-assigned ratings of A+/A1. The Company specializes in manufacturing and distributing polypropylene bags, including block-bottom AD-Star bags, block-bottom open-mouth bags, laminated stitched bags, and woven PP fabric. UPPL’s market position is strengthened by the support of its principal sponsor, ANS Capital (Pvt.) Limited. As a key supplier to the cement industry, UPPL's demand is closely tied to the performance of the local cement sector. During the first eight months of FY25, total cement dispatches (domestic and export) declined by 0.5% year-over-year (YoY) to 30.4 million tons (Mt). Domestic dispatches fell from 26.06Mt in the same period last year (SPLY) to 24.5Mt. UPPL’s profitability is driven by two primary factors: sales volume and input costs. The pricing of raw materials in this segment is closely linked to fluctuations in international oil prices, exposing the company to exchange rate volatility and cost escalations. These challenges limit its ability to fully pass on rising input costs, thereby impacting overall profitability. Reflecting these trends, the company's revenue declined by ~6.4% to PKR 2.5bln, while margins contracted across all levels due to cost-push inflation and weakened product demand. However, during 1HFY25, macroeconomic indicators showed signs of improvement, and global oil prices declined by approximately 8.2%, averaging around USD 73 per barrel. This reduction in costs contributed to a recovery in margins. With an installed capacity of ~126mln PP bags per annum, UPPL's capacity utilization has remained stagnant at around ~50%. The company holds a market share of ~21% in PP bag distribution, with sales primarily concentrated in Pakistan's northern region. UPPL's assigned ratings benefit from its ownership structure, which remains exclusively within the sponsoring family. The company has also implemented a robust internal control framework across its operations. Looking ahead, UPPL is actively expanding into stitched bag production to serve the flour and rice milling industries. The company’s financial risk profile is characterized by moderate coverages, stable cash flows, and an adequate working capital cycle, while its capital structure remains moderately leveraged, primarily consisting of short-term borrowings and a modest equity base.
The ratings remain dependent on UPPL’s ability to sustain its market position amid a challenging industry landscape while enhancing its financial performance. Successful execution of expansion plans, prudent working capital management, and maintaining sufficient cash flows and coverage ratios will be crucial for the company's rating stability. Any significant decline in profitability and coverage metrics could impact the ratings adversely.

About the Entity
Ultra Pack (Pvt.) Limited, incorporated in 2016, is a private limited concern principally engaged in the production & sale of PP bags. During 2017, the Company formally started its operations by installing the latest Extrusion & Bag Conversion technologies. The Company is wholly owned by ANS Capital (Pvt.) Ltd. (~100%) through sponsoring family. Mr. Ibrahim Tanseer Sheikh is the CEO of the Company. He has more than 10 years of diversified professional experience in cement and paper & packaging sectors. He is assisted by a team of qualified professionals. Omer Aizaz Shiekh and Faisal Atta Shiekh are serving along as the Executive Director on the Board.